In the wake of the South Australia blackouts, the Coalition has proposed changes to the Clean Energy Finance Corporation, which would allow it, or essentially force it, to invest in ultra-super critical coal-fired power stations.
But what is the CEFC anyway? And is coal-fired power part of its remit?
What is the CEFC?
The CEFC is a government-owned green bank created in 2012 under the Clean Energy Finance Corporation Act 2012 by the Gillard government to finance the clean energy sector. Tony Abbott tried and failed twice to get rid of the CEFC while he was prime minister.
What is the CEFC’s mission?
The main function of the CEFC is to invest directly (through partnerships, trusts, or joint ventures) or indirectly (through subsidiaries) in renewable and low-carbon technologies.
The CEFC invests in businesses and projects that develop or commercialise clean energy technology, and in businesses that supply the goods or services necessary to businesses that develop or commercialise clean energy.
The CEFC is directed under legislation to develop a diverse portfolio of investments and to only invest in projects with an acceptable, not excessive, level of risk.
Where does the CEFC get its funding?
The CEFC Act created a CEFC Special Account, which receives $2 billion each July 1 for five years from July 2013 from the government. It is expected to be operationally self-funded at the end of those five years through investment returns.
What’s wrong with using the CEFC to fund new coal-powered plants?
Energy Minister Josh Frydenberg wants the CEFC to invest in “carbon capture and storage”. Carbon capture technology is one of two energy sources the CEFC is currently prohibited from investing in (the other is nuclear power). This is in part because the CEFC cannot invest in any project that doesn’t reduce emissions by 50% or more. The government would have to relax the CEFC’s 50% cap to allow investment in the proposed high-efficiency, low-emission coal-powered plants.
Isn’t ‘clean coal’ an oxymoron?
There are two main “clean coal” technologies. Carbon capture and storage is done by catching the carbon emissions before they are released into the atmosphere by forcing the exhaust through a liquid solvent that absorbs the carbon dioxide and then burying the compressed waste. Problems with the technology include high cost, unproven technology, and logistics of disposing of the waste.
High-efficiency, low-emission power stations are also labelled as “clean coal”, though “cleaner coal” is a more accurate term. These power stations operate by burning coal at ultra-high levels to increase efficiency and reduce carbon emissions. Malcolm Turnbull says they are essential to securing Australia’s energy future. Opposition environment spokesman Mark Butler says they’re twice as expensive as gas-fired power and more expensive than renewables.
Why does the government want to invest in carbon capture?
The government is planning to repeal the ban on carbon capture, as well as urging the CEFC to invest in ultra-super critical coal power plants. The CEFC has said that it would be resistant to investing in new coal-fired generators, meaning the government would have to change the CEFC’s investment rules if it wants that to happen. Frydenberg is considering doing just that, and says that it would be possible, since the CEFC is the Clean Energy Finance Corporation, not the Renewable Energy Finance Corporation. Frydenberg told ABC’s Insiders program that the goal was to lower emissions at the same time as stabilising baseload power so Australians don’t experience more blackouts.
CEFC chief executive Oliver Yates has said that it would be a risky move for taxpayers due to the fact that renewable energy costs are on a downward trend and the proposed ultra-super critical coal plants are unlikely to have a long-term path. Yates has also said that it would be difficult to find a private operator or commercial investor in the current market and there’s no point in building the coal stations, which are likely to provide energy at a higher cost.